DexCom earnings beat by $0.03, revenue topped estimates
On Wednesday, BofA Securities analyst Allen Lutz revised the price target for Omnicell (NASDAQ:OMCL) shares, reducing it to $38 from the previous $46, while keeping a Neutral rating on the stock. Currently trading at $32.79 with a market capitalization of $1.53 billion, InvestingPro data suggests the stock is in oversold territory. Lutz highlighted the reaffirmed guidance as a positive development for the company but pointed out that the transition of the Chief Financial Officer (CFO) introduces additional execution risks in the near term.
The year 2025 is pivotal for Omnicell as it aims to replace the revenue from XT cabinet upgrades with new product launches like XT Amplify. With current annual revenue of $1.11 billion and strong free cash flow of $151 million, the company maintains a solid financial foundation. Despite successful performance over the past year and a strong backlog expected to support 2025, Lutz expressed concerns about the company’s ability to grow product revenue after 2025. He noted that this would likely depend on the accelerated adoption of new products to make up for the anticipated decline in XT cabinet revenue.
Lutz remains optimistic about Omnicell’s Advanced Services business, which is anticipated to see growth in the mid-single digits, driven by increasing demand for specialty pharmacy services. However, he remains cautious about the company’s product revenue growth prospects beyond 2025.
The analyst appreciates Omnicell’s leading position in the pharmacy automation sector and is looking for strong execution on new products in the upcoming year to adopt a more constructive stance. The price objective has been adjusted to $38, reflecting a multiple of 11.5 times the CY25 enterprise value to EBITDA, a decrease from the previous 14 times, to account for the incremental execution risk associated with the management change and to align with the compression of peer group multiples. Lutz confirmed that the fiscal year 2025 estimates for the company remain unchanged.
In other recent news, Omnicell reported its fourth-quarter earnings, exceeding analyst expectations with an adjusted earnings per share of $0.60, surpassing the forecasted $0.58. The company’s revenue for the quarter reached $306.88 million, outpacing the consensus estimate of $299.6 million and marking a 19% year-over-year increase. However, Omnicell’s guidance for the first quarter and full year of 2025 disappointed investors, with projected first-quarter earnings per share falling short of the $0.31 consensus. The company anticipates revenue between $255 million and $265 million for Q1, missing the $264.9 million analyst estimate at the midpoint. For the full year, Omnicell expects earnings per share of $1.65-$1.85 on revenue of $1.1-1.15 billion, with revenue projections slightly below expectations.
Additionally, Omnicell announced the resignation of CFO Nchacha Etta, effective September 15, 2025, or upon the appointment of his successor. The company has begun a national search for a new CFO, with Etta assisting during the transition. In other executive news, CEO Randall A. Lipps secured a new employment agreement extending through 2027, ensuring leadership continuity. Under the agreement, Lipps will receive a base salary of at least $833,000, with eligibility for significant bonuses and long-term incentives. These developments reflect Omnicell’s ongoing strategic priorities amid industry challenges.
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